ISS: ST's Bozotti cheers for European chips

GRENOBLE, France – Carlo Bozotti, president and chief executive officer of STMicroelectronics, provided a keynote address to the Industry Strategy Symposium (ISS Europe) held here by industry body SEMI, which contained a commitment to European chip making – but only just.

Rather than sounding three-cheers, Bozotti outlined European chipmaking as one leg of a three-legged manufacturing strategy at Europe's leading indigenous chip company.

While SEMI Europe President Heinz Kundert and his fellow committee members were applauding a new awareness at the European Commission of the importance of rebuilding advanced manufacturing in Europe, Bozotti was supportive of the principle, but nonetheless re-iterated the importance of foundries and Asian manufacturing to ST.

But Bozotti did a good job of making the case for European manufacturing, when he said: "When manufacturing goes R&D soon follows, and when you lose manufacturing, so too does the ability to innovate."

But Bozotti repeated a previously stated position that ST wished to retain some manufacturing, enough to allow negotiation and influence on technology debates at partner companies.

"I am convinced it is both necessary and possible to have a successful and sustainable semiconductor industry in Europe" Bozotti said referring to "customer impatience" and local proximity as reasons where European chip making could be retained.

Nonetheless ST's plans for relatively low capital expenditure as proportion of sales revenue – low teens of percent versus 20 percent plus at leading manufacturers – do not indicate a company that is about to revitalize chipmaking in Europe.

One of the themes of the conference as the day developed was that while European semiconductor companies, and the European Commission now agree that advanced manufacturing of micro- and nanoelectronics are of strategic importance there is, as yet, little idea of what can be done to change the climate so that European manufacturing is seen to be not only possible but also desirable because it is profitable.

Bozotti's comment of R&D following manufacturing and its effect on innovation should be the key message here as well. Any country that loses its ability to make things, especially those things it needs, necessarily becomes too dependent on other countries...to their own peril.

It is one thing to have this goal of making things indigenously, but the market pressure will eventually decide where the components get made. At least Europe has some advantages over US in that there are many government grants to the industry R&D to develop next generation technology and manufacturing. If the US industry consortiums can address this in some manner or mechanisms, there is hope for US industries as well (it happens at some smaller scale but this really needs to be ramped up).
To that end, I was happy to see Global Foundries break ground for the new fab in upstate NY; ironically, Silicon Valley has all 'Silicon' making fabs vanish in the last few years!
MP Divakar

It is difficult to keep manufacturing just for the sake of keeping it. If it does not make financial sense, the firms will eventually outsource the jobs regardless their intentions. The was an article in the Time magazine saying that Germany has tried very hard to keep the manufacturing in the country and they have succeeded spectacularly and now has become the China of Europe. The price is that now 20% of German's manufacturing workforce commands less than $550 monthly disposable income. And this is still a lot higher than those in China and India. It seems to me that they are just postponing the inevitable. More systemic solution has to be sought.

Bozotti is expounding the "global view". All chip makers and "Global" companies take this path. European unemployment will say he is wrong. Absolutely wrong. He complicates things by trying to straddle. As do all "Global" companies.
It turns out he is incorrect (as are all the "Global" companies) in the long run! Think and act local! Exporting your jobs means IMPORTING unemployment. Enjoy!
The USA has been in this conundrum for many years. Today we are relegated to being the "global" police. Hmmmm. The best military technology (like the Roman's) but getting mired in muddy situations which we cannot hope to influence. Net drain on the economy - which has already been net drained - by sending all your jobs overseas!
Policing is a poor substitute to engineering and innovation. Makes me want to throw up. Where are all our incredibly popular tech leaders? Still at dinner at Woodside?

ST is correct to maintain a focus on manufacturing. I think it made a good choice in partnering with GF. Europe lacks the technical innovation present in the U.S. I think this has to do with less rigid structural restraints in the U.S. Asia has exceeded expectations since the 1970s. But rapid growth in Asia is starting to slow down. The lack of economic activity before the 1970s in Asia is a historical anomaly dating back for a couple of centuries.